As our political leaders enter the dying days of a federal election campaign that has offered piecemeal fixes for the parlous state of the nation’s finances, an area that demands greater scrutiny is the dog’s breakfast of tax policies being proposed by the two major parties. This masthead has already argued that the Coalition’s proposal to allow first-home buyers to deduct mortgage interest from their taxable income entrenches flawed and distortionary tax settings. It is likely to further inflate housing demand in a market already constrained by supply and creates a fresh hole in the income tax base, soaking up revenue needed to help finance genuine productivity-boosting tax reform.

Loading…